Leaving the Pork Barrels Behind

Tue, Feb 5th, 2019

When the President signed into law the new tax reform act at the end of 2017, the elimination of the state and local tax deduction set in motion what was likely to be an exodus from the high-tax states such as New York and California. Well, it’s happening. The front page of today’s Wall Street Journal reports that public officials in those states are alarmed that the high-income executives are “bolting” to low-to-no tax states. New York’s Governor Cuomo blamed the states $2.3 billion budget shortfall on the new federal tax which is driving people to leave the state.

The flip side of this story is that in Florida, where many are fleeing to, there is no state income tax and real estate is a bargain by comparison.

New York is not alone. New Jersey and Connecticut are bleeding revenues as their well-to-do executives say adios. Recently more than a half-dozen South Florida developers set up booths at the Lowell Hotel in Manhattan to pitch their projects to local brokers and wealthy individuals, and the booths were, not surprisingly, very crowded.

In my view we are only seeing the tip of the iceberg. As the baby boomers hang-up their careers, the exodus will become a torrent as they head south to Florida and west to Texas and Nevada, leaving the pork barrel states in even more desperate shape.